Summary

INTRODUCTION AND SUMMARY OF ARGUMENT

Although the parties agreed to arbitrate their disputes and thus avoid the delay and expense of litigation in court, this case has spread to three different tribunals: the New York courts, a New York arbitrator affiliated with the International Institute for Conflict Prevention & Resolution ("CPR"), and the California courts. At issue is which tribunal can decide which issues, and what rulings control the venue for the resolution of this dispute.

It appears that, one way or another, a CPR arbitrator will decide the merits.

The practical point of dispute is instead whether a court or an arbitrator will decide whether that CPR arbitration will take place in New York (as the parties agreed) or in California (as Zhang maintains that California law requires). And the question directly presented here is whether a California court must stay judicial proceedings in light of a New York court's order--here affirmed on appeal--compelling arbitration of the same venue dispute.

The parties' arbitration agreement answers the first question. As the Court of Appeal and Superior Court determined, the arbitration provision here delegates arbitrability issues to the arbitrator. The delegation language encompasses "challenges to [the arbitration panel's] jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement," and "jurisdictional challenges with respect to both the subject matter of the dispute and the parties to the arbitration." (Ct. App. Opn. p. 16 [85 Cal.App.5th at p. 180] [quoting CPR rules incorporated by reference].)

Indeed, because only the arbitration clause's venue provision is at issue--a procedural question addressing how rather than whether the arbitration will go forward--the delegation would be effective here even if the delegation provision did not include issues of jurisdiction and arbitrability. The arbitrator decides the venue issue whether it is viewed as a gateway issue of arbitrability or a procedural issue within the scope of the arbitration itself.

The text of Code of Civil Procedure section 1281.4 answers the second question, reinforced by principles of interstate comity and, in this case, by the Full Faith and Credit Clause. The statute requires a California court to stay its hand when another "court of competent jurisdiction," whether in California or another State, has ordered arbitration of the same dispute. Here, a New York court ordered arbitration of this dispute. There is no serious argument that the New York court lacked "competent jurisdiction" as that term is commonly understood. Nor does Zhang contend that the exercise of jurisdiction violated due process, or that the New York court acted beyond its jurisdiction under New York law. If the New York court had not agreed that the venue question was for the arbitrator, that court undoubtedly had jurisdiction to determine whether Labor Code section 925 required that the dispute be arbitrated in California. But principles of comity require the California courts to avoid interfering with the New York court's order. And the Full Faith and Credit Clause reinforces that obligation, especially now that Zhang has exhausted his appellate options without success.

Finally, in accord with established principles favoring the enforcement of reasonable forum-selection provisions, this Court should construe Labor Code section 925 to present a venue question that any court or arbitrator of competent jurisdiction can determine, rather than as an effort to deprive other sovereigns' courts of jurisdiction.

The judgment of the Court of Appeal should be affirmed.

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